MCA warns of higher prices over EPF for migrant workers

Summary

• MCA questions the government’s two percent EPF contribution for migrant workers, warning it could raise consumer prices and push employers toward hiring undocumented workers.

• Its vice-president Lawrence Low also raises concerns about overlaps with the Private Retirement Scheme and urged the government to provide clear answers.

MCA has questioned the government’s move to impose a two percent Employees Provident Fund (EPF) contribution rate for migrant workers and their employers.

Its vice-president Lawrence Low said the initiative requires guarantees and effective measures to ensure it benefits the country’s economy.

A key concern, he noted, is whether the two percent deduction will lead to higher costs for consumers due to rising prices.

“In this challenging economic climate, do employers have other options? Expensive goods not only burden consumers but also weaken business competitiveness, affecting local industries and workers.

“Those who are unable to absorb or offset the cost may resort to hiring undocumented migrant workers, thus worsening the problem of undocumented migrant workers in the country,” he said in a statement today.

2pct contribution

On Feb 3, Prime Minister Anwar Ibrahim announced that the cabinet had approved a two percent EPF contribution rate each for migrant workers and their employers.

This is reduced from the previous proposal of standardising the rates for both Malaysians and migrant workers, meaning that employees would contribute 11 percent of their wages while their employers contribute 12 to 13 percent.

The previous proposal had received backlash from employers and industry groups, leading to a reduction in the contribution rate for migrant workers.

The move to make EPF contributions mandatory for migrant workers is expected to be implemented in the fourth quarter of this year.

Low also reminded the government that Singapore had previously implemented a similar policy but officially scrapped it last year.

Citing media reports, he said the Central Provident Fund (CPF) - Singapore’s equivalent of Malaysia’s EPF - closed the accounts of 300,000 foreign workers in April 2024.

“This proves that Singapore recognised the policy’s flaws and prioritised its citizens over foreign workers.

“Is Malaysia moving backwards by implementing a policy other countries have abandoned? Will migrant workers in Malaysia now enjoy dividends like Malaysian citizens?” he questioned.

He also asked whether the government’s move overlaps with the existing Private Retirement Scheme.

“These concerns require convincing answers,” said Low, who also chairs MCA’s Economic and SME Affairs Committee.

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